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Burger King Antitrust No-Poach Agreements Class Action

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The complaint for this class action alleges that Burger King’s franchise agreement contains an anticompetitive clause that prevents one Burger King franchise from hiring or soliciting employees from another Burger King franchise or from hiring employees who have worked at another franchise in the past six months. The complaint claims that this no-poach agreement is an illegal conspiracy that violates federal antitrust laws.

The class for this action is all persons in the US who worked for a Burger King restaurant at any time from January 1, 2010 until the anticompetitive conduct alleged in this complaint has stopped.

The case has been brought against Restaurant Brands International, Inc. (“RBI”), Burger King Worldwide, Inc. (“BKW”), and Burger King Corporation (“BKC”) by BK employee Monique Michel. Burger King, the fourth-largest fast-food chain in the US by sales, has about 7,000 restaurants in the US. However, only about fifty of these are owned by BKC; the rest are franchises. 

The complaint quotes the Burger King franchise agreement as containing this no-poach clause: “Neither BKC nor Franchisee will attempt, directly or indirectly, to entice or induce, or attempt to entice or induce any employee of the other or of another Franchisee of BKC to leave such employment, or employ such employee within six (6) months after his or her termination of employment with such employer, except with the written consent of such employer.” 

The complaint says all franchisees are required to sign the same, standardized agreement, making it a “collusive policy” between BKC and its franchises. The purpose of the policy, the complaint says, is to reduce turnover and suppress wages, making the franchises more profitable, and thereby encouraging more franchises and in the process increasing franchise fees, property rents, and sales royalties. 

If franchisees violate the agreement, BKC has the right to terminate their rights to operate their franchises. 

The complaint then quotes a publication from the Department of Justice’s Antitrust Division, Antitrust Guidance for Human Resource Professionals: “Naked wage-fixing or no-poaching agreements among employers, when entered into directly or through a third-party intermediary, are per se illegal under the antitrust laws.”

It also explains that “firms that compete to hire or retain employees are competitors in the employment marketplace… It is unlawful for competitors to expressly or implicitly agree not to compete with one another, even if they are motivated by a desire to reduce costs.”

Also, the complaint claims that Burger King practices fraudulent concealment in that it does not tell employees about the no-poach agreements.

Washington state’s attorney general investigated fast-food no-poach clauses in 2018. In August 2018, BKC agreed to no longer put no-poach clauses into agreements for Washington franchises and to no longer enforce the ones in existence. However, the complaint says that many franchisees are not aware that the no-poach clauses are no longer in effect.

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